财务会计英语版课后答案.docx

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1、Chapter 1Page 81. Classify following items as either an expense (E),a revenue(R),an asset (A),or a liability( L);Cash, buildings, salaries of the sales force, $5 owed to a company for work performed, Mortgage to a bank, sales.Answer： Cash-ABuildings-ASalaries ofthe sales force-E$5 owedLMortgage to a

2、 bankLSales-RClassify each of the following as n operating (O), bank (I), or financing (F) in a statement of cash flows; Wage paid to workers, Cash received form a bank in the form of a mortgage, cash dividends paid to a supplier of inventory, Cash paid to purchase a new machine.Answer： Wage paid-OC

3、ash of mortgage F Cashdividends paid - FCash paid to supplier of inventoryO Cash paid to purchase a machine-IPage111. List several economic decisions that rely on accountinginformation. how much was used. In fact, the same type of logic could be used-computing a monthly rate for the coverage and app

4、lying that to the months reminding, instead of the months used.Now take adjustment for depreciation expense and accumulated depreciation. Estimating the value of the equipment at year end might be easy, for example, if there is a market for used equipment, or very difficult, for example, if the equi

5、pment was specially designed for Websell. Once a value estimate for the equipment at year end is obtained, depreciation expense would be the change in value over the year.Page 123l.$5000 X (1 +0.06)八 10二$5000 X 1.79085二 $8954.242.$5000 X (1 +0.06/2)A(l 0 X 2)=$5000 X (1 +0.03)八 20=$5000 X 1.80611二$9

6、030.562. $1000 X (1.05)A3+$1000 X (1.05)A2+$1000 X(1.05)八仁$3310.133. ($1000 X 0.05/5)A13+$1000 X (1+0.05/5)、10+$ 1000 X (l+0.05/5)A5=($ 1000 X (1.01)A15)+($ 1000 X (1.01)A 10)+($ 1000 X (1.01) A5) =$1160.97+$1104.62+$1051.01 =$3316.6Page 124l.xX.(1.07)A3=$3000x = $3000/( 1.07)八 3二$2448.892 . Calcula

7、te the present value at 10% of $1300 received two years from now. If that is greater than $1000, you are better off with the $1300 to be received in two years. If its present value is less that $1000, you better off with $1000 now. $1300/(1.10)八2二$1074.38Therefore, you are better off receiving $1300

8、 two years from now.Another way to do this problem is to take the future value at 10% of $1000. At the end of two years, the $1000 would compound up to:$1000X(1.10)A2=$1210,Which is less than you would have at that point if you took the $1300.3 . The most I would be willing to pay is the present val

9、ue at 8% of the stream of $1000 payment:$ 1000/(1.08) Al+$1000/(1,08)A2+$ 1000/(1,08) A3二$925.926+857.339+793.832=$ 2577.1 (rounded)Page 168Aging takes the balance in accounts receivable at the end of the year, and sorts it by how long ago the transaction occurred that gave rise to that receivable.

10、Experience has shown that “older accounts have less likelihood of ever being collected. Percentages of likely uncollectibles for each category are applied to the totals in that category , and the results added to obtain an estimate of the allowance for uncollectibles required to value properly the e

11、stimated amount that will be collected from the accounts receivable. The bad debts expense then falls out as a plug in the allowance fbr uncollectibles.The percentage-of-sales method just estimates bad debt expense as a percent of sales, and plug the balance in the allowance account.1. Cash118Accoun

12、ts receivable11812/31/2003(to recognize collection of cash from companies owing service co. from 2002 sales)Allowance fbr doubtful accounts7Accounts receivable712/31/2003(to write off accounts we know will not be collected)Accounts receivable125Sales revenue125 12/31/2003(to recognize revenue and to

13、 anticipate collection of the receivable)If we focus on recording the bad debts expense that is associated with billings for 2003, we would record.06 X $125000=$7500 in bad debts expense.Bad debts expense7.5Allowance fbr doubtful accounts7.5 12/31/2003(to record bad debt expense in anticipation of n

14、ot collecting 100% of receivables)Method one: focus on the percentage of sales expected not to be collected.Allowance for doubtful accounts12/31/0371012/31/027.512/31/03Ending balance10.5at 12/31/03(10.5 is the “plug”the number that drops out)Now we move to 2004, where events now proceed as expected

15、 .Collections are $117.5 thousand.Cash117.5Accounts receivable117.5 12/31/2004(to recognize collection of cash form companiesowing service co. from 2003 sales)Allowance for doubtful accounts7.5Accounts receivable7.512/31/2004(to write off accounts we know will not be collected)Accountsreceivable125S

16、ales revenue12512/31/2004(to recognize revenue and to anticipate collection of the receivable)If we focus on recording the bad debts expense that is associated with billings for 2004, we would record.06 X $125000=$7500 inbad debts expense.Bad debts expense7.5Allowance fbr doubtful accounts7.512/31/2

17、003(to record bad debt expense in anticipation of not collecting 100% of receivables)The allowance for doubtful accounts using the peentage-of-sales method looks like this:Method one: focus on the percentage of sales expected not to be collected.Allowance for doubtful accounts12/31/0371012/31/027.51

18、2/31/03expenseWrite-off 12/31/047.510.512/31/03balance7.512/31/04expenseBalance at10.512/31/04Only the entries recording bad debt expense are different using the aging method. Instead of the above entries recording bad debt expense, we would have the following analysis:Each year, we would adjust the

19、 balance in the allowance for doubtful accounts so that the net receivable ends up at $117500. That is, we would solve $ 125000-X=$ 117500,and find that the ending balance in the allowance for doubtful accounts must be $7500.Analyzing the account, we would determine that at 12/31/2003 we must add $4

20、500 to the allowance for doubtful accounts:Bad debts expense4.5Allowance fbr doubtful accounts4.512/31/2004(to record bad debt expense in anticipation of notcollecting 100% of receivables)At 12/31/2004, we must add $7500 to the allowance fordoubtful accounts:Bad debts expense7.5Allowance fbr doubtfu

21、l accounts7.5 12/31/2004(to record bad debt expense in anticipation of not collecting 100% of receivables)Using aging, the allowance for doubtful accounts T-account looks like this:Method two: focus on the ending balance in the allowance for doubtful accounts.Allowance for doubtful accounts12/31/037

22、1012/31/024.512/31/03expenseWrite-off 12/31/047.57.512/31/03balance7.512/31/04expenseBalance at7.512/31/04Chapter 8Page 183LIFO is last-in first-out. It means that in computing ending inventory and cost of goods sold, the cost of items sold is assigned in reverse chronological order of their purchas

23、e, beginning from the most regent items purchased in a period. FIFO is first-in, first-out .It means that in computing ending inventory and cost of goods sold, the cost of items sold is assigned in chronological order of their purchase, beginningfrom the goods on hand at the beginning of the period.

24、 Average cost means that in computing ending inventory and cost of goods sold, the average unit cost of the beginning inventory and items purchased in a period is used to determine the cost of goods sold and remaining inventory.1. Yes, it is still a positive net present value project. In fact, its n

25、et present value is higher than when the purchase was made at$1.05 per unit, since the cash outflow is reduced but the cash inflow remains thesame. The cash outflow on 12/31/01 when purchases are at $0.95 per unit is $114.This means the net cash flow at 12/31/01 is ($4) instead of ($16),and the NPV

26、for Widget Company is:NPV=-100-$4/l.l+$10/ (1.1A2) +$144/ (1.1A3) =$12.82First, we redo the case of FIFO. The inventory T-account is:Widget Co. Inventory Account under FIFO Flow AssumptionInventory (FIFO)1/1/01 Beginning balance 01/1/01 Purchase(100$l)100100 Transfer to CGS(100$l)95 Transfer to CGS(

27、100$0.95)12/31/01 Purchase(120$0.95) 1141/1/02 Balance (120$0.95)11412/31/02 Balance (100$1.10) 1101/1/03 Balance (20$0.95+129 Transfer to CGS(100$0.95+100$1.10)129100$1.10)1/1/04 BalanceEnding inventory values can be read from the above T-account. Net incomes are:Widget Co.Net Incomes using FIFO200

28、120012003Revenues$110$120$114Cost of Goods Sold(100)(95)(129)Net Income (pretax)MD$25$15Now we redo the case of FIFO. First, the inventory T-account is:Widget Co. Inventory Account under FIFO Flow AssumptionInventory (FIFO)1/1/01 Beginning balance 01 /1 /01 Purchase(100$l)10012/31/01 Purchase(120$0.

29、95) 114 95 Transfer to CGS(100$0.95)1/1/02 Balance(20$0.95+100$1.00)100$1.00)119100 Transfer to CGS(100$L10)100$1.00)119100$1.00)12/31/02 Balance (100$1.00) 1101/1 /03Balance(20$0.95+1/1 /03Balance(20$0.95+119 Transfer to CGS(20$0,95+1/1/04 BalanceEnding inventory values can be read from the above T

30、-account. Net incomes are:200120012003Revenues$110$120$114Cost of Goods Sold95(95)(129)Net Income (pretax)$15$10$25Page 186To calculate the market-to-book ratios and accounting returns on equity:Market-to-book Ratios under Average Cost20012002Market Value of Inventory$126.00$132.00Book Value Invento

31、ry$123.27$127.24Market Value/ Book Value1.0221.037Accounting Rates of Return under Average CostCollecting the results for FIFO from the chapter and these results for200120022003Beginning Book Value of Inventory$100.00$123.27$127.24Net Income$7.27$13.97$16.76Net Income /Beginning Book Value0.07270.11

32、330.1317Answer： Whether to grant a loan How much to pay for a share of common stock. Whether to grant a rate increase to an electric utility How much in damages the loser of a lawsuit must pay How much of a bonus to pay a plant manager Whether to enter a new market2. Why do financial statements have

33、 footnotes, and what kinds of information might you find in them?Answer：Financial statements have footnotes because financial disclosure is a complex business. The notes tell us some of the specifics about the company environment , what accounting methods the company has used, what the accounting nu

34、mbers might be if alternative methods had been used, and some of the major contingencies that are not formally included in the statement proper.Page 20.Describe the process of setting accounting standards. What are the roles of all the parties you mention?Answer：The FASB, a private, not-for-profit o

35、rganization ,sets GAAP inaverage cost, we have:Market-to-book Ratios under Various Cost Flow Assumption20012002FIFO1.04109.Average cost1.0221.037LIFO1.01.008Accounting Rates of Return under Various Cost Flow Assumption200120022003FIFO0.050.830.19.Average cost0.07270.11330.1317LIFO0.100.1190.099As is

36、 apparent, the market-to-book ratios and accounting rates of return for average cost are between for LIFO and FIFO.1 . Because it has more recent costs on the balance sheet in the inventory account, FIFO has market-to-book ratios closer to 1 regardless of whether prices rise or fall.Chapter 10Page 1

37、96The total profit on the transaction is the sales price of $880.00 less the original cost of $734.03:Sales price of securities$880.00Less : original cost($735.03)Profit on transaction $144.97The cash flows were: $735.03 out on January 1, 2001, and $880.00 in on January 3, 2003.There were profit in

38、2001, 2002, and 2003.In 2001, there was a profit of $81.17.In 2003,there was a profit of $5.00.1. The unadjusted book value of the security on December 31,2002 was $793.83.If the market value of the security on that date was $790.00,an adjustment reducing its carrying value by $3.83 is required to w

39、rite it down to its market value:Unrealized loss on market value securities-trading 3.83Marketable securities -trading 3.83If the security were sold for $810.00 on January 3, 2003, theentry would be:Cash 810.00Marketable securities -trading 790.00Gain on marketable securities-trading 20.001/03/2003(

40、To record the sale of the Marketable securities一 trading)Page 1981. When a securities is classified as trading security, profits or losses show up on the income statement in every period from when the security is purchased until when it is sold, when a security is classified as available-for-sale ,p

41、rofits or losses only show up on the income statement in the period in which the security is sold.2. the unadjusted book value of the security on December 31,2002 was $793.83.If the market value of the security on that date was $790.00,an adjustment reducing its carrying value by $3.83 is required t

42、o write it down to its market value, however unlike the trading security case ,the unrealized loss is an equity account ,not a temporary account:Unrealized loss on marketable securities-available-for-sale 3.38Marketable securities -trading 3.83To record the sale of the security for $810.00 on Januar

43、y 3,2003: Cash 810.00Unrealized gain on marketable securities-available- for-sale(58.80-3.83)54.97Marketable securities-trading 790.00Realized gain on marketable securities- available-for-sale74.9712/31/2002(To mark-to-market the Marketable securitiesavailable-for-sale)Held-to-maturityAvailable-for-

44、saletradingDebitInterest revenueThe balance sheetThe balance sheetsecurityvalueis accrued using the purchase price of the debt security. the balance sheet reflects the historical cost of these curity, adjusted for the effect of accrued interest.That is, the balance sheet reflects the amortized cost

45、of these curity , not its market value.reflects the maket value of the security at the balance sheet date .the balance sheet also has an equity account that reflects the cumulative difference betweenthehistoricalcostand the current market value of the security .the income statement is only affected

46、in the period the security is sold, at which time the securitys book and reflects the maket value of the security at the balance sheet date. The other side of the entry to adjust the security to market value is an realized gain or loss, which is reflected in the income statement, it is reflected in

47、retained earnings through the process of closing the temporary accounts.realized gains or losses must be adjusted to zero.Equity securityThis case is not possible.anequity security can not be held to maturity.Same as aboveSame as aboveChapter 111. a. Under straight-line depreciation, the depreciation expense each year is$600-$ 100/5 years=$100 per year.b. Under double-declining balance depreciation, thedepreciation expense each year is given in the following table:yearRemaini ng book valueDecliningbalance rateDeclining balance depreciati onStraight-line on remaining depreciable